There are a few fixed deposits that are available for children and some of them are more in the nature of offering benefits to the child, when he/she is young.
PNB Balika Shiksha Fixed Deposit Scheme
Now, very few would know of such a scheme. If you have a girl student in your house, you must allow them to avail this scheme. All girl students who complete their class VIII from Kasturba Gandhi Balika Vidyalayas, irrespective of whether they belong to scheduled caste/scheduled tribe and enroll for class IX in state/UT Govt., or a Government aided school or local bodies schools in the academic year 2008-2009 onwards, would be entitled to a fixed deposit of Rs 3000.
The deposit amount cannot be prematurely broken and would mature only after the girl child completes 18 years of age. It is important to note that students attending unaided and private run schools are not entitled to this scheme.
All other terms and conditions of the fixed deposit as applicable, will apply from time to time.
Sishu Mangal Deposit Scheme
This scheme was launched way back in 1988. According to the scheme, you can open a fixed deposit account in such a way that it translates into a sum of Rs 5000 at the expiry of 6 years. Now, the amount is pretty small, but, nonetheless it is a scheme deposit from Allahabad Bank.
The scheme will work on the same principal of minor guardian, which is the case otherwise when you place any fixed deposits on behalf of a minor.
The interest rate would depend on the bank's prevailing interest rates. Actually speaking the amount you need to deposit to make Rs 5000 would be high, if interest rates are low and low, when interest rates are high.
Other bank fixed deposits for children
You can also open other fixed deposits with various banks, but, here again the parent would have to be the guardian. It is important to realize that any amounts that attract interest would be added to the total income of the parent and tax included accordingly.
So, the parents income gets taxable each time interest accumulates. It is important to understand that there are various other child related products that you can buy, if you wish to buy including mutual funds. We have just foccused on a few fixed deposits for children.